Introduction

What’s financial literacy, you ask? It’s the knack for making smart, responsible calls with your cash in everyday life—covering everything from stashing away savings and investing to spending, earning, and borrowing. It’s about getting the hang of money concepts like interest, inflation, and risk, plus mastering tools like bank accounts, credit cards, and loans. Arming your kids with this solid mix of financial know-how, skills, and habits sets them up to take charge of their money future, dodge common traps, and nab financial stability. It’s a ripper gift to give ‘em early!

Related: How to yarn with your kids about a recession

The Importance of Financial Literacy

Managing your dosh effectively takes a fair dinkum set of skills—everything from basic maths to budgeting, grasping how interest ticks, and keeping your emotions in check to avoid blowing it all. A CBI Economics analysis, commissioned by GoHenry and Wilson Wright, reckons financial literacy can boost early-career earnings by up to 28% and makes kids more likely to kick off their own businesses. Louise Hill, Co-founder and CEO of GoHenry, reckons it’s a game-changer!

A Cambridge Uni study backs this up, showing financial habits are set by age seven, with most young Aussies forming the core behaviours that shape their money moves for life. Sam Sims, Chief Executive of National Numeracy, agrees: “Feeling comfy with numbers is a vital life skill, especially for handling your cash. We face money decisions daily—at work, at home, paying bills, comparing prices, or saving for a getaway. If numbers freak you out, staying on top of your finances gets tough.”

Even though financial literacy’s been in the secondary school National Curriculum since 2014, there’s still a massive gap to fill. A London Institute of Banking and Finance study found 82% of young people want to learn more about money—stuff like mortgages, pensions, loans, credit cards, budgeting, and debt management, with tax close behind. It’s clear we need to step it up!

Related: The big deal of financial literacy for Gen Z

Why Should Financial Literacy Be Taught in Schools?

We’re living in a financial world that’s trickier than a maze, and that’s why kids need a solid financial education. Teaching financial education for kids benefits every young Aussie by giving them the tools to plan ahead, stay solvent, and steer clear of sticky debt down the track.

Stewart Perry, Director of the Centre for Financial Capability, nails it: “To fight the national financial capability crisis, we’ve got to give kids and young people a fair go at building money and management skills through top-notch financial education. Rolling it out in schools boosts their money confidence and resilience, setting them up to handle economic rough patches later.”

Kids who’ve had a taste of financial education at school are more likely to have solid money skills. Yet, only 4 in 10 say they’ve had it—blokes and sheilas alike. Many schools want to ramp it up, but packed timetables, tight curriculums, and a lack of know-how hold them back.

Related: Why isn’t financial literacy taught in schools? Things we wish kids could learn

Talking to Your Kids About Financial Literacy

Chatting with your kids about money doesn’t need to be a heavy, brain-bending talk. The best way is to make it a regular yarn with chances to put it into action. Louise Hill, co-founder and CEO of GoHenry, says, “CFPB research shows kids start picking up values, skills, and attitudes about money and habits in early childhood. They also start grasping planning ahead and delayed gratification. Give them pocket money or an allowance, and they get real-life practice with these critical skills—the building blocks of adult financial smarts.”

Kick off with simple chats when you buy groceries, pay bills at a café, or grab cash from the ATM. These yarns help kids piece together what financial literacy looks like in the real world. With teens, level up to trickier topics like borrowing, credit scores, loans, and the stock market. Tie it to news, school lessons, or their career dreams and life goals.

Related: Teen money management, Teaching kids about money management

What Are the Benefits of Being Financially Literate from a Young Age?

Our latest economic research shows the difference financial education for kids can make—kids taught early could be £70,000 richer by retirement. Louise Hill adds, “Financial literacy opens the door to a bright, prosperous future for more young Aussies. It brings individual, societal, and workplace perks—we just need to arm them with the right tools and knowledge.”

Helping kids master money skills early—budgeting, saving, investing, and dodging debt—pays off big time:

Financial Independence: With a solid grasp of personal finance, kids learn to stand on their own feet and lean less on others for cash support.
Improved Decision-Making: Financial literacy equips them to make savvy calls on spending, saving, investing, and borrowing, leading to better outcomes later.
Debt Management: Understanding interest rates, loan terms, and credit scores helps them manage and avoid debt traps.
Building Wealth: It empowers them to pick smart investments and grow wealth over time, like saving for retirement.
Financial Security: Knowing how to handle unexpected hits and plan ahead brings peace of mind.
Avoiding Financial Pitfalls: They’re less likely to fall for scams, dodgy lending, or other money traps that can wreck their future.
Teaching Responsibility and Accountability: Early money lessons instil a sense of duty and good habits that stick for life.
Empowerment: Ultimately, it gives them the reins to shape their financial future, chase dreams, and live life their way.

Related: Books that teach kids about money

What Are the Key Components of Financial Literacy?

At GoHenry, we reckon there are six core bits to financial literacy: earn, spend, save, invest, borrow, and protect.

Spend: This covers a stack of money skills kids need to nail. Teach them the value of cash, where it comes from, and how to budget using GoHenry’s Money Missions. Explain needs versus wants—needs keep you going, wants can spiral if unchecked. Parenting expert Tanith Carey, author of What’s My Child Thinking?, says, “Learning to prioritise spending is a key life skill. Knowing the difference between ‘needs’ and ‘wants’ underpins all future money calls. ‘Wants’ can keep growing with consumerism, leading to overspending if you don’t check the urge.”
Save: Saving’s more than shoving cash in a jar—it’s about knowing why and setting short-term goals (like a new toy) or long-term ones (like uni). Show them how delaying gratification and opening savings accounts pays off. Financial Coach Simonne Gnessen from Wise Monkey Financial Coaching adds, “It’s crucial for kids to prioritise savings over instant gratification by setting goals. Frame it as a future gift to themselves—they’ll thank you!”
Earn: Earning money hands-on teaches its value. Louise Hill notes, “With 75% of kids agreeing financial education helps their future career, giving them early earning chances can boost equality and job prospects.” It’s also about reading payslips and grasping taxes—tricky but vital.
Borrow: Understanding borrowing, interest, loans, repayments, and credit scores stops debt disasters. Start with what credit is, why people borrow, and how to build a solid credit history.
Invest: Teach kids that investing can grow wealth—introduce tax-free options, stocks, shares, and the stock market for long-term gains.
Protect: Cover online scams and money safety tips, like guarding personal details and crafting strong passwords. Clinical psychologist Linda Blair says, “Talk to kids about scams—it’s not gullibility, but impulse control. Help them pause and think to avoid being taken.”

Activities to Help Children Build Financial Literacy

It’s never too early to start building financial smarts. Dr David Whitebread, co-author of the Cambridge study, says, “Parent-led experiences teaching planning, reflection, and emotional control can make a huge difference in fostering good money habits.”

Give Them Pocket Money: Regular pocket money with a prepaid card like GoHenry’s boosts their financial education, giving them freedom to spend and learn.
Use a Financial Education App: GoHenry’s Money Missions—videos, quizzes, and badges—make learning fun.
Start Budgeting Their Own Money: Teach them to budget pocket money for a better money vibe as adults.
Set Savings Goals: Set up saving pots for short-, mid-, and long-term goals to show the perks of saving.
Participate in the Digital Economy: With debit/credit card use hitting 81% of spending in 2020 (British Retail Consortium), teaching digital spending and saving is a must.
Get a Summer Job: A summer gig introduces taxes and the worth of their time—our 2022 Youth Economy Report shows kids are hustling with online businesses, babysitting, and car washing.
Get Paid for Chores: For little ones, chores for cash teaches earning and saving—GoHenry parents swear by it.
Show Them Common Financial Mistakes: Cover overspending, skipping savings, ignoring debt, missing interest rates, skipping planning, and misjudging financial products to build early smarts.

Financial Literacy Resources

Resources like board games, age-suiting explanations, and fun videos can plant the right money messages. Teach key terms:

Budget: A plan to split income for food, housing, fun, and savings—teaches wise money moves.
Savings: Cash set aside for future use—key for emergencies and goals.
Interest: The cost of borrowing or earnings on savings—shows loan and investment power.
Credit: Borrowing with a repayment promise—stress good credit and risks.
Debt: Money owed with interest—highlight consequences.
Income: Earnings from wages, allowances, or investments—teaches responsible handling.
Compound Interest: Interest on principal plus past interest—shows early saving power.
Inflation: Rising prices cutting buying power—explains money value shifts.
Credit Score: A number reflecting credit risk—crucial for loans and cards.

The Bigger Picture

Financially savvy kids grow into adults who dodge debt, fuel the economy, and lift communities. A 2020 ANZ survey found they’re 30% less likely to face bankruptcy. This makes financial education for kids a national win, aligning with Why financial know-how is a must for young Aussies!

Conclusion

Teaching financial literacy to kids is a fair go at setting up young Aussies for money mastery. From Cambridge’s habit-forming insights to GoHenry’s practical tools, the proof’s in the pudding—early lessons build habits that last. With pocket money, apps, and parental chats, we can turn homes and schools into launchpads for financial success. Let’s get stuck in and give our kids the edge they deserve. Keen to start? Contact us for resources or a yarn about bringing this to your crew!

FAQs

Why’s financial literacy key for kids?
It stops money blunders, sets life goals, and builds cash confidence.
When should it start?
Begin with basics at home by age five, then school from primary.
How do parents help?
Chat about money daily, use apps, and set savings goals together.
What if schools lag?
Push for curriculum changes or use free tools like MoneySmart.
Are there fun ways to teach?
Yep, try games, simulations, and apps like GoHenry’s Money Missions.
How do I measure progress?
Watch if they budget, save, or grasp concepts like interest.
What’s the long-term gain?
Wealthier retirements, less debt, and a stronger Aussie economy.
Can it prevent scams?
Absolutely—kids learn to spot traps and protect their cash.
Where find resources?
Check ASIC’s MoneySmart or GoHenry for freebies.
How tie it to goals?
Link lessons to dreams like buying a house or travelling.

Table Summary

Aspect	Key Focus	Action Steps
Why It Matters	Forms habits, boosts earnings, avoids debt	Start by age seven, use studies
School Role	Builds skills, fills gaps	Add to curriculum, train teachers
Home Chats	Daily talks, real practice	Use pocket money, link to life
Benefits	Independence, wealth, security	Teach budgeting, investing, debt skills
Key Components	Earn, spend, save, invest, borrow, protect	Use apps, role-plays, expert tips
Activities	Hands-on learning	Pocket money, jobs, budgeting games
Resources	Tools and terms	Games, videos, term explanations
Impact	Economic strength, less bankruptcy	Early education, community lift